Crowdsourcing and the stock market

In the last years, it became progressively clear that the process of innovation involves complex social practices in which the interactions between multiple parties play a central role: external contributors are able to come up with brilliant ideas and extreme outcomes. Thus, firms are increasingly using crowdsourcing as an open innovation mechanism for gathering fresh ideas and for achieving explorative outcomes. The organization of crowdsourcing projects represents a signal of firms’ efforts towards distant search, which is valued by stockholders. Through an event study, we demonstrate that crowdsourcing projects announcements trigger positive price shocks, reflecting investors’ positive expectations about companies’ future profits, and we highlight what factors moderate such reaction.